Few stocks in British market history have delivered a run quite like Rolls-Royce (LSE:RR.) shares.

From the darkest days of the pandemic, the FTSE 100 engineer has climbed nearly 1,400% to sit at around 1,400p today. That’s the kind of return that creates generational wealth.

But it also raises an uncomfortable question: has the stock now run out of road? Or is this still just the beginning?

The bull case: two enormous growth catalysts

Even with the impressive share price surge, the most exciting chapter in Rolls-Royce’s story may not yet have been written.

The next major growth opportunity is nuclear energy. Rolls-Royce’s small modular reactors (SMRs) received formal nuclear justification approval from the UK government earlier this year, secured a £599m loan from the National Wealth Fund to begin work at the Wylfa site on Anglesey. It also signed an Early Works Contract with CEZ Group to deploy up to 3GW of electricity in the Czech Republic.

That means Rolls-Royce is now the only company in the world with multiple contractual commitments to deliver SMRs across Europe. That gives it a genuine first-mover advantage in a market that could eventually be worth hundreds of billions.

At the same time, the firm’s UltraFan engine programme is also making impressive strides. With more testing scheduled before the end of 2026, the project’s making steady progress. And with multiple airlines looking to modernise their fleets to improve fuel efficiency, Rolls-Royce looks nicely positioned to capitalise on this accelerating tailwind.

With that in mind, it isn’t surprising to see some institutional analysts like Bank of America forecasting Rolls-Royce shares to climb even higher to around 1,740p.

The bear case: priced for perfection

There’s no denying Rolls-Royce is on a bit of a technological rampage. But whether that can translate into further share price momentum remains a big question mark.

Bank of America’s aggressive price target is dependent on the continued success of Rolls-Royce’s core aerospace operations as well as near-perfect execution of its UltraFan and SMR projects. Yet that’s far from guaranteed.

UltraFan has been in development for over a decade, while SMRs aren’t likely to start generating any revenue until the 2030s at the earliest. Until then, there remains a lot of opportunities for spanners to be thrown into the works. And it’s why some institutional analysts are actually projecting Rolls-Royce shares to fall from current levels.

So what should investors make of all this?

The bottom line

Rolls-Royce is a genuinely world-class business executing brilliantly under CEO Tufan Erginbilgiç. It successfully capitalised on the recovery of the civil aerospace sector following the pandemic, and is now positioning itself to ride even more powerful long-term tailwinds for SMRs and next-generation engines.

But with the shares trading at a forward price-to-earnings ratio of 35, a lot of this growth potential already seems to be priced in. That’s why for investors expecting gargantuan returns, there may be better growth stocks to explore elsewhere.

Should you invest £5,000 in Rolls-Royce Plc right now?

When investing expert Mark Rogers and his team have a stock tip, it can pay to listen. After all, the flagship Twelfth Magpie Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets.

And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Rolls-Royce Plc made the list?

Zaven Boyrazian does not hold any positions in the companies mentioned.

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In the last two years, the International Consolidated Airlines Group (LSE:IAG) share price, has surged 165%.

It’s a pretty extraordinary return from a business that most investors had written off as broken after the pandemic. Yet despite that enormous run, the shares still trade on a price-to-earnings (P/E) ratio of just 7.9. That’s the kind of valuation usually reserved for companies in serious trouble, not ones posting record profits.

So why’s IAG still so cheap? And is now the time to do some shopping?

The business is delivering in a big way

Looking at the group’s latest (first quarter) results, revenue grew 1.9% to €7.2bn, comfortably ahead of analyst expectations, while operating profit surged 77.3% to €351m on the back of broadly flat costs.

Digging deeper, the premium cabin demand is the standout story.

Business travel continues to recover strongly, and the transatlantic routes that British Airways (BA) dominates are proving especially lucrative. BA now accounts for roughly half of group operating profits and holds an enviable portfolio of Heathrow slots that are near-impossible to replicate.

The Loyalty division is also quietly outperforming, with revenue up 10% paired with a 32.6% boost to profits at a 20.1% margin. And with all that in mind, it isn’t so surprising that the average consensus from institutional analysts suggests that the IAG share price will continue to rise from here, reaching 523p by this time next year.

But if the business is beating profit expectations and the experts are calling for the stock to go higher, why have IAG shares struggled to climb in 2026?

What’s keeping the valuation so depressed?

The answer isn’t anything nuanced. It’s fuel costs. The Middle East conflict’s sent IAG’s full-year fuel bill to an estimated €9bn, roughly €2bn above what was planned at the start of the year. And while management expected to pass on around 60% of this to customers through higher ticket prices, the remaining 40% will nonetheless apply notable pressure to margins and cash flow.

In fact, free cash flow guidance for 2026 has already been pulled back. And if tensions in the Middle East continue to escalate, another outlook downgrade could be on the horizon.

It’s a sharp reminder that airlines are cyclical, capital-intensive, and highly sensitive to things entirely outside their control. And the stock market has unsurprisingly baked this uncertainty into the share price. That’s why IAG shares are trading at a seemingly cheap P/E ratio today.

The question now is, should investors take advantage?

A stock worth considering?

On the surface, the low P/E ratio makes IAG shares appear cheaper than they actually are. The fuel cost uncertainty might be a short-term problem, but if the wrong conditions materialise, it can rapidly evolve into a substantial one.

In other words, there’s a lot of risk surrounding this enterprise right now even with a financially disciplined management team at the helm. For investors willing to take on the geopolitical risk, IAG could emerge as a top performer if the war in the Middle East cools.

But personally, I think there are better opportunities to explore elsewhere. Such as…

What income stock do we like better than International Consolidated Airlines Group right now?

One of our Share Advisor analysts has just released a brand new stock report that we think is a must-read for any investor looking to try and generate potential income.

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Zaven Boyrazian does not hold any positions in the companies mentioned.

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In the last 12 months, the Vodafone (LSE:VOD) share price has climbed 35%, comfortably beating the FTSE 100‘s already impressive 17.2% gain over the same period.

It’s a remarkable turnaround for a stock that spent years grinding lower, but it raises an obvious question. How much higher could it go from here? And how much money could an investor realistically make with £5,000 today?Let’s investigate.

What the forecasts are saying

The honest answer is that the analyst community is more divided on Vodafone shares than most. At one end of the spectrum, the most optimistic projections have price targets as high as 150p, which on a £5,000 investment would return around £6,778 by July 2027.

At the other end, other analysts still see the shares drifting as low as 85p, which would turn that same £5,000 into just £3,840.

Looking at the average consensus, Vodafone shares are predicted to land close to 111p, which is essentially where the telecoms stock is trading today. So which forecast should investors be listening to?

Digging deeper

Seeing a split opinion on this business isn’t too surprising. Vodafone’s in the middle of a restructuring attempt. And right now its simply too soon to tell if current efforts will be successful.

That’s why the range of price targets is so wide. Some analysts are predicting success while others expect Vodafone to fail. And to be fair to the bears, this isn’t the first time new management’s tried fixing Vodafone’s problems.

However, it’s worth pointing out that some early positive operational momentum is starting to materialise. Vodafone’s 2026 fiscal year results (ended in March) were genuinely encouraging.

Total revenue grew 8% to €40.5bn, operating profit swung from a €400m loss to a €2.8bn gain, and adjusted free cash flow hit €2.6bn, coming in at the top end of guidance.

But what’s most exciting of all is what’s coming next. In its 2027 fiscal year, which kicked off a few months ago, management anticipates free cash flow to potentially expand to as high as €2.9bn courtesy of emerging synergies with its Three UK merger.

And with its Africa segment also delivering more double-digit organic growth, this latest turnaround attempt already appears to be far more successful than previous efforts.

So should investors consider being aggressive?

What could still go wrong?

Despite the improving trajectory, there are a couple of things worth watching closely. Net debt’s still a persistent problem and now stands at €25.4bn following the Three UK consolidation. At the same time, Vodafone’s largest core market, Germany, remains pretty soft.

Organic revenues have recently returned to growth but only by a tiny margin. And if performance doesn’t pick up, Vodafone’s recovery could prove to be a slow process that ultimately causes the business to lag its rivals.

The bottom line

Vodafone’s a simpler, stronger business than it was three years ago, and the free cash flow trajectory over the next few years looks genuinely compelling.

The lack of meaningful progress in Germany is why I’m personally not ready to jump in and buy shares today. But if the business continues to deliver, I may have to reconsider. That’s why I think investors should already start investigating this business for a potential future investment.

Should you invest £5,000 in Vodafone Group Public right now?

When investing expert Mark Rogers and his team have a stock tip, it can pay to listen. After all, the flagship Twelfth Magpie Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets.

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Over the last five years, the Tesco (LSE:TSCO) share price has quietly doubled. A £5,000 investment made in July 2021 has grown to £10,042. And for investors who reinvested their dividends along the way, that figure rises to around £12,424. Not bad for a supermarket!

But after a run like that, is the stock still worth buying today? Or has the easy money been made?

The competitive moat’s widening

Tesco’s latest quarterly trading update shows a business still firmly in the driving seat. Group sales came in at £16.8bn, with UK like-for-like sales up 1.8% on top of an exceptionally strong prior year period. Two-year like-for-like growth in the UK stands at an impressive 6.9%, which tells a more complete story of the consistent momentum being built under CEO Ken Murphy.

Online growth continues to impress too, with sales up 8.9% in the UK. And Tesco’s insurance and mobile services are growing fast, with insurance policies in force now up 15% to 2.7 million customers.

It seems that Tesco’s quietly evolving from a grocer into a consumer ecosystem, and that has meaningful implications for the long-term margin trajectory. Even in the near-term, management’s reiterated its underlying operating profit guidance of £3bn-£3.3bn. And analysts have taken note.

The team at Morgan Stanley issued an Overweight rating with a 560p share price target – around 18.9% higher than where Tesco shares are trading today. And looking across the full spectrum of price forecasts, the mood from institutional experts seems to be pretty bullish.

So with plenty of wind in Tesco’s sails, is this a cheap stock worth considering today?

What could go wrong?

At a price-to-earnings ratio of around 17, Tesco’s far from a deep value play. And after already doubling in five years, most of the re-rating has seemingly already happened. That doesn’t mean there isn’t more money to be made, but it does suggest another doubling might be difficult to deliver without a significant expansion of profits.

Growing the bottom line’s certainly possible. But with fierce competition from discounters such as Aldi and Lidl, alongside incoming expected energy inflation, Tesco might be forced to cut prices to stay competitive, putting direct pressure on its already razor-thin margins.

Meanwhile, while most of Tesco’s operations are running smoothly, Booker Wholesale remains a bit of a pain. While far from disastrous, like-for-like sales fell 3.2% during the first quarter, partly reflecting a lower-margin contract exit and some unfortunate prior-year comparatives.

But with growing strain on the UK economy, particularly in the restaurant and food services sectors, this downward trajectory could prove persistent throughout the rest of 2026 and potentially beyond.

The bottom line

Tesco isn’t the bargain it once was, but it remains a high-quality, competitively-entrenched business that seems to be getting better every year.

That’s definitely the hallmark of a steady compounder. And while growth investors will likely be disappointed, patient investors looking for a more defensive business may want to consider inspecting this stock a bit closer.

Should you invest £5,000 in Tesco Plc right now?

When investing expert Mark Rogers and his team have a stock tip, it can pay to listen. After all, the flagship Twelfth Magpie Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets.

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BT (LSE:BT.A) shares have been one of the more surprising performers on the FTSE 100 over the last couple of years. The telecoms stock has climbed over 80% since May 2024 as new chief executive Allison Kirkby makes real progress on the company’s long-running restructuring.

And yet even after that impressive run, the shares still offer a 4.3% dividend yield today, nearly 50% more than the 3% offered by a typical FTSE 100 index fund. So should I be considering BT for my income portfolio?

The income case is getting stronger

The headline numbers from its 2026 fiscal year (ended in March) are genuinely encouraging. Pre-tax profits rose 8% to £1.4bn, and BT hit every single one of its financial targets for the year

More importantly for income investors, the full-year dividend was raised to 8.32p per share, and the board has now adopted a formal policy to grow the payout by low-to-mid-single-digit percentages every year going forward.

That’s a meaningful commitment from management. And it’s backed by a clear cash trajectory with normalised free cash flow expected to hit £2bn in the 2027 fiscal year and £3bn before the end of the decade. For reference, normalised free cash flow currently sits near £1.5bn.

Meanwhile, the group’s transformation plan’s running ahead of schedule. Management’s already delivered £1.5bn in gross annualised cost savings and has subsequently increased the overall savings target to £3.7bn.

At the same time, the business is also hitting critical operational milestones, with full-fibre broadband now covering more than two-thirds of UK homes.

In other words, BT’s simultaneously expanding its telecoms empire and becoming more efficient in the process. That definitely bodes well for long-term dividend sustainability. So is this a top-notch income stock, or is there a catch?

What’s holding BT shares back?

Despite the improving trajectory, there are a couple of risk factors worth flagging and the biggest and long-standing issue is BT’s substantial obligations.

Net debt currently stands at £20bn, and the pension deficit has nudged up to £4.2bn. That’s a significant financial burden, and it’s the main reason the dividend policy’s explicitly tied to reaching a BBB+ credit rating before any enhanced shareholder returns are considered.

Another point of contention is revenue growth, or rather the lack of it. Even with a rapid fibre and 5G rollout, total group revenues were actually down by 3%. And looking to the 2027 fiscal year, this downward trajectory’s expected to continue.

The situation’s a little complex. But in oversimplified terms, BT’s ageing legacy voice business is shrinking faster than the newer fibre and mobile products can replace it. And there’s a good chance this trend will continue into the future, before an inflexion point can be reached.

So what should investors make of all this?

What’s the verdict?

BT shares aren’t a shortcut to explosive growth. The company’s in the middle of a genuine transformation, making real progress, and now offering investors a rising dividend backed by a clear and credible cash flow plan.

However, debt reduction remains the ultimate priority for management. That’s definitely prudent. But for income investors who are interested it will demand patience. And in the meantime, there are other income stocks offering far more attractive cash-covered yields today, such as…

What income stock do we like better than Bt Group Plc right now?

One of our Share Advisor analysts has just released a brand new stock report that we think is a must-read for any investor looking to try and generate potential income.

And the best bit is that you can see if for yourself, right now, absolutely free of charge!

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Zaven Boyrazian does not hold any positions in the companies mentioned.

The post Should I buy BT shares for their 4.3% dividend yield? appeared first on The Twelfth Magpie.

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Right now, the Diageo (LSE:DGE) share price seems to be in a similar position to that of Rolls-Royce just a few years ago.

The engineering giant once looked like a broken business, battered, debt-laden, and deeply out of favour with investors. Then came a new chief executive, a bold strategic reset, and a share price that went on to climb nearly 1,400% in five years.

Today, Diageo could be on the verge of delivering something similar. After falling over 60% from its 2021 peak, a new CEO has taken over, and a strategic reset has just been launched. But with the shares still in the gutter, it looks like investors have almost entirely given up hope.

So is now the time to be a contrarian and buy before the recovery begins?

The turnaround’s quietly taking shape

Last year, Diageo brought in Sir Dave Lewis as its new leader – the man who engineered one of the most celebrated corporate turnarounds in recent memory at Tesco.

Since then, the drinks giant has been steered on track to generate around $300m of cost savings by the end of 2026. At the same time, free cash flow’s expected to hit $3bn, creating valuable financial flexibility and providing capital to start deleveraging the balance sheet.

Meanwhile, outside North America, the business seems to already be bouncing back with non-core divestments underway, and organic growth on the rise.

So what are the analysts making of all this? Right now, the mood among institutional analysts seems to be cautiously optimistic. So much so that the average share price target over the next 12 months is around 27% higher than where the shares are trading today.

Yet, this might only be the tip of the iceberg. So far, Lewis has been quite confidential in his strategy to fix Diageo’s problems. But with a full unveiling expected in the coming weeks, investors will soon discover the full scale of his turnaround plan, creating a powerful catalyst that could trigger the long-awaited recovery.

What could go wrong?

As previously mentioned, outside of North America, Diageo seems to be moving in the right direction. But inside this crucial market, the landscape’s still pretty soft. Organic net sales for US spirits have dropped a painful 15.4% in its most recent quarterly results, driven by rising competition from cheaper brands.

Lewis has already acknowledged the business needs to become more competitive in this market. But that isn’t something it can fix overnight.

Even a turnaround specialist like Lewis needed several years to fix the deep-rooted problems that Tesco faced. And while Rolls-Royce proved that (post pandemic) turnarounds can be swift, it’s not sensible to assume that Diageo can be repaired at the same speed, especially with fewer tailwinds at its back.

What’s the verdict?

Despite all of its recent troubles, Diageo still owns a world-class portfolio of brands. And with early signs of improvements already materialising, today’s dirt cheap forward price-to-earnings ratio of just 12 skews the risk-to-reward ratio quite favourably, in my opinion.

A successful turnaround is far from guaranteed, and it’s likely to be a multi-year process slower than the one Rolls-Royce delivered. But for patient investors, I think Diageo shares are definitely worth mulling today.

Should you invest £5,000 in Diageo Plc right now?

When investing expert Mark Rogers and his team have a stock tip, it can pay to listen. After all, the flagship Twelfth Magpie Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets.

And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Diageo Plc made the list?

Zaven Boyrazian does not hold any positions in the companies mentioned.

The post Is the Diageo share price about to pull a Rolls-Royce? appeared first on The Twelfth Magpie.

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BAE Systems‘ (LSE:BA.) share price has been one of the FTSE 100‘s great success stories of the last five years.

The defence giant’s climbed 238% since July 2021, turning a £5,000 initial investment into roughly £16,900 today. Yet over the last 12 months, the stock’s gone almost nowhere despite a world that feels increasingly less safe.

So is the gravy train stuck in the sidings? Or is this simply a red-signal pause before the next drive higher?

What the latest numbers say

Despite the recent lack of movement from BAE shares, its most recent trading update makes for impressive reading. The defence giant delivered a strong start to the year across all of its divisions, with management reiterating its full-year targets of 7%-9% revenue growth and 9%-11% underlying earnings growth.

Digging a little deeper reveals that the group’s enjoying a steady stream of new orders arriving at pace. In just the first few months of 2026, BAE secured a £2.5bn contract to support Türkiye’s recently ordered Eurofighter Typhoon fleet.

At the same time, another £1.1bn of MBDA air defence orders landed from European customers, alongside a further $325m order under a restricted US national space programme.

That’s a remarkable streak of major contracts landing in quick succession. And it reflects the emerging reality that governments around the world are significantly ramping up their defence spending programmes.

So with more outlay expected on the horizon, how much could a £5,000 investment today realistically grow into by this time next year?

Looking at the latest share price forecasts from institutional analysts, the average consensus seems to be around £6,375. That’s a 27.5% return vastly outperforming the stock market’s 8% average.

However, as experienced investors know, no forecast is ever set in stone. So the question investors need to keep in mind is…

What could go wrong?

Despite all the positive momentum, the flat share price performance over the last 12 months highlights an important dynamic at play.

A lot of the good news, like rising NATO budgets, strong order books, and geopolitical tailwinds, has already been baked into the valuation. And with a price-to-earnings ratio of over 27 times, it’s clear investors are anticipating BAE to continue signing more substantial contracts in the coming years.

Obviously, that isn’t guaranteed. While BAE’s heavily integrated with countless existing defence programmes, the firm still has to fiercely compete with other defence primes for new initiatives. And if supply chain disruptions or other operational spanners start getting stuck in the mechanics, the business could struggle to keep up with expectations.

To buy or not to buy?

BAE will publish its next set of results later this month, and investors will understandably be watching closely to see whether their bullish conviction’s well founded. Personally, I remain quite optimistic.

The business has plenty of challenges ahead. But with an impressive multi-decade track record of navigating defence spending cycles, BAE shares could be worth considering, especially if the group’s upcoming results continue to show impressive operational momentum.

Should you invest £5,000 in BAE Systems right now?

When investing expert Mark Rogers and his team have a stock tip, it can pay to listen. After all, the flagship Twelfth Magpie Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets.

And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if BAE Systems made the list?

Zaven Boyrazian does not hold any positions in the companies mentioned.

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BP (LSE:BP.) shares have been a solid performer within the FTSE 100 over the last 12 months. The energy stock’s up 29.5% since July 2025, as rising oil and gas prices pave the way for expanding profit margins.

But with BP shares currently trading at around 515p, the question every investor’s now asking is whether there’s more fuel left in the tank. Let’s investigate.

A blockbuster second quarter

In its latest second-quarter trading statement for 2026, the company paints a very encouraging picture.

Brent crude averaged $103.85 per barrel during the period, up sharply from $81.13 in the first quarter. That’s a huge tailwind for oil production revenues. And don’t forget that BP’s own rule of thumb suggests that every $1 rise in the Brent price adds $340m to pre-tax profits annually.

The refining side of the business is looking even more impressive. BP’s Refining Indicator Margin (RIM) nearly doubled quarter-on-quarter to $29.6 per barrel from $16.9. And it’s a perfect demonstration of the business enjoying impressive operating leverage within a rising price environment.

Meanwhile, the balance sheet’s being actively strengthened. Net debt’s on track to fall from $25.3bn to $22bn-$23bn. And after redeeming €2.5bn of perpetual hybrid bonds in June, the company’s also making steady progress in simplifying its financial structure.

But what does this all mean for BP share price? Looking at the latest analyst forecasts, it seems most institutional investors think BP shares are likely to keep marching upwards. While there’s a fairly broad range of opinions, the average consensus suggests the oil & gas stock could climb to 599p by this time next year, with one analyst issuing a 700p price target.

Needless to say, this is a pretty strong vote of confidence. So is this a no-brainer?

What’s holding it back?

Despite what the impressive numbers suggest, not everything’s hunky dory at BP. Production volumes are actually falling at the moment, with the impact being offset by higher commodity prices. Part of this is being driven by regular scheduled maintenance.

However, another significant disruptive factor is the ongoing conflict in the Middle East, which management has no control over.

Even beyond the geopolitical turmoil, there are also some genuine execution concerns to consider. BP’s still in the process of implementing a strategic reset, divesting underperforming assets and paying down debts in the process.

As previously mentioned, the group’s making strides here, but it nonetheless adds complexity that could prevent it from fully capitalising on the current energy price tailwinds.

So what’s the verdict?

Overall, BP’s a business that’s quietly doing a lot of things right. The balance sheet’s improving, refining margins are strong, and the oil price tailwind is firmly behind it heading into the second half.

There are still significant risks to watch closely. But overall, for investors seeking exposure to the energy sector, this FTSE 100 business could be worth a closer look.

Should you invest £5,000 in Bp P.l.c. right now?

When investing expert Mark Rogers and his team have a stock tip, it can pay to listen. After all, the flagship Twelfth Magpie Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets.

And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Bp P.l.c. made the list?

Zaven Boyrazian does not hold any positions in the companies mentioned.

The post Should I buy BP shares in July or am I too late? appeared first on The Twelfth Magpie.

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Lloyds‘ (LSE:LLOY) shares have had a remarkable 12 months. The stock’s climbed 47.5% since July 2025 and, crucially, broke above the psychologically significant 100p threshold for the first time in almost two decades.

Today, the bank stock trades at around 112p. But the question now is whether the easy money has already been made. And if not, should I be considering this stock for my own portfolio? Let’s take a look.

A bank firing on all cylinders

The underlying business is genuinely performing well. In the first quarter of 2026, pre-tax profits surged 33% higher to £2.03bn, smashing past analyst expectations of £1.84bn. At the same time, net interest income climbed 8% to £3.57bn on the back of a widening net interest margin, which now sits at 3.17%.

What’s more, it seems this strong performance is expected to continue. Management has nudged up its full-year guidance, with net interest income now on track to exceed £14.9bn, paired with a £7bn gain from the bank’s ongoing structural hedges that allowed it to continue enjoying higher interest rates even after the recent cuts.

Return on tangible equity guidance also remains at 16%+. And with Lloyds’ lending engine continuing to work well with a further £5.1bn of new loans issued, the analysts at UBS promptly issued a Buy recommendation following these results.

And pairing all this with the FCA partly suspending the motor finance redress scheme following legal challenges, compensation payments likely won’t land before 2027 at the earliest, removing some short-term uncertainty.

Needless to say, this is all rather positive. So does that make Lloyds an obvious stock for me to consider adding to my portfolio?

What’s the catch?

The continued strong progress and positive regulatory developments haven’t gone unnoticed. In fact, they’re the main reason why Lloyds’ shares have been outperforming lately. And it means that there’s a good chance the expected future growth’s likely already priced in.

When looking at the average consensus from institutional analysts, Lloyds’ shares are only projected to climb to around 125p by this time next year. While that still implies a solid near-11% growth from current levels, it’s hardly on par with the phenomenal returns investors have enjoyed over the last 12 months.

It’s also worth flagging that the motor finance situation remains a bit of a thorn in Lloyds’ side. A delay’s not the same thing as a cancellation.

The bank still has £1.95bn set aside to settle compensation claims. But with industry experts projecting that the total compensation payout could range £8.2bn-£11bn across everyone involved, Lloyds, being one of the most exposed players, might end up having to pay considerably more.

So where does that leave investors today?

The bottom line

Lloyds is a well-run bank delivering real earnings growth, and the longer-term income credentials remain solid. But at 112p, I think it’s unlikely that investors will see another round of 40%+ gains without another surprise earnings catalyst.

That doesn’t mean Lloyds’ shares aren’t worth considering. In fact, for investors looking for a more defensive way to diversify, Lloyds could still be worth considering. But for more growth-focused investors like me, there are likely better opportunities to explore elsewhere.

Should you invest £5,000 in Lloyds Banking Group Plc right now?

When investing expert Mark Rogers and his team have a stock tip, it can pay to listen. After all, the flagship Twelfth Magpie Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets.

And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Lloyds Banking Group Plc made the list?

Zaven Boyrazian does not hold any positions in the companies mentioned.

The post At 112p, are Lloyds shares still a slam-dunk buy? appeared first on The Twelfth Magpie.

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Buying the right dividend shares can be one of the most powerful wealth-building moves an investor ever makes.

Start with £1,000 in a FTSE 100 index fund today, and you’ll earn a passive income of roughly £31 a year at a 3.1% yield. That’s not exactly life-changing, but put that same £1,000 into the right individual stock and the income story can look very different indeed.

Take Aviva (LSE:AV.) as a prime example.

Why Aviva stands out

With a 6% dividend yield and six consecutive years of dividend growth, Aviva could be one of the most compelling income propositions on the London Stock Exchange right now.

That same £1,000 investment would generate around £60 a year in passive income – nearly double what a FTSE 100 tracker currently offers. And if Aviva continues hiking its payout as it has done for the past half-decade, that income stream will quietly grow larger without investors having to lift a finger.

Of course, just because payouts have increased in the past doesn’t mean they will continue to climb in the future. So is Aviva actually a good investment?

Looking at the latest first quarter results for 2026, the answer seems to be leaning towards yes. General Insurance premiums surged 19% to £3.4bn, while the group’s combined operating ratio improved a meaningful 2.5 percentage points to 94.1%. In Wealth, where Aviva’s the number-one player in the UK, net flows jumped 49% to £3.3bn, driven by a 71% surge in Workplace pension inflows.

The Direct Line acquisition, completed in July 2025, is also integrating ahead of schedule. Management expects to deliver capital synergies of more than £350m by year-end, which would push the Solvency II cover ratio comfortably above the 160%-180% target range.

In other words, the business seems to be firing on almost all cylinders. So what’s the catch?

Where the risks lie

No investment is without its complications, and Aviva’s no exception. Bulk purchase annuity (BPA) volumes fell 52% in the first quarter as competition intensified and quote activity softened. BPA’s a key growth engine for Aviva’s Retirement division, and it’s how the firm’s tapping into the enormous pension risk transfer market.

But with rival firms like Legal & General unlikely to stop chasing this market, Aviva could continue to see sustained weakness in this segment that might drag down earnings momentum.  

At the same time, its Health arm, which sells private medical insurance policies, seems to be struggling as well. With lower demand from small- and medium-sized businesses due to lacklustre economic conditions, this part of Aviva’s growth engine appears to be misfiring.

To be fair, it’s far from disastrous, but it’s an important factor to watch closely moving forward.

The bottom line

Aviva’s a business doing most things right. It has a 6% yield, growing dividends, a strengthening general insurance franchise, and encouraging medium-term targets of 11% annualised operating earnings growth between now and 2028.

That’s why, for investors seeking dividend shares to buy, I think Aviva shares are worth investigating further. But it’s not the only income stock I’ve got my eye on right now…

What income stock do we like better than Aviva Plc right now?

One of our Share Advisor analysts has just released a brand new stock report that we think is a must-read for any investor looking to try and generate potential income.

And the best bit is that you can see if for yourself, right now, absolutely free of charge!

No jargon. No hard sell. Just a clear look at an income share we think is worth your time.

Zaven Boyrazian does not hold any positions in the companies mentioned.

The post How you can invest £1,000 in UK dividend shares and start generating passive income right now appeared first on The Twelfth Magpie.

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